Equity Release is now receiving more scrutiny as its popularity increases. More popular than ever, 10 years ago one would rarely see any advertisement for Equity Release Schemes on the television. Now there are many on daytime tv and demand is increasing.
It is essential to choose a scheme, a broker and equity release company that treats you fairly. A report in the Guardian this week highlighted a case where the owner of a property had died at the age of 98 having been looked after by her daughter for the last 8 years. Indeed, the daughter had moved into the property to look after her. The death of the owner normally results in the property being required for sale by the Equity Release company.
The repossession demand from the Equity Release company is reported to have required the clearance of the house and removal of the daughter within 4 weeks. In that case the equity release contract had been entered into in 1994 and the rolled-up interest was a considerable sum even in the upmarket location of North London. In this context it is important to distinguish between “lifetime mortgages” (where the interest rolls up and on death the original capital and rolled up interest is paid from the house sale) and “home reversion” which is where you receive a lump sum for the share in your home but the company then takes a legal interest in part or whole or that property. It was this type of home reversion scheme which caused the difficulty in this case.
Whatever you do with Equity Release, be sure to take independent legal advice before entering into any schemes.
For further advice please contact Mark Ollier by email firstname.lastname@example.org or by telephone 01297 626950.